Policy

Verizon Asks For New York City-Wide Franchise

4/15/2008 11:53 AM Eastern

Verizon said today that in response to Friday’s request for proposals from New York City, it has applied for a franchise that would let it serve all five boroughs of the city with a fiber network it would build out by mid-2014.

Currently, Time Warner Cable is the largest cable provider within the city, covering Manhattan, Staten Island, Queens and part of Brooklyn. Cablevision is franchised in the Bronx and part of Brooklyn.

Both companies’ 10-year franchises expire this year, and they were in the process of seeking renewals. RCN serves some portions of the city (including Manhattan and Queens) with cable, phone and Internet as an “open service provider.”

On April 11, the city made a public request for proposals “from any company ready, willing and able to offer service to every household in New York City, in competition with existing providers,” according to a city Department of Information Technology & Telecommunications press release.

“The solicitation issued today is non-exclusive and open-ended, so that any company interested in and capable of offering service to all City households will be eligible for consideration for a franchise over the months and years to come,” the April 11 release said.

“While in recent months, DoITT has been in discussions with Verizon regarding the terms under which Verizon would build and offer competitive cable television service to every home in New York City via its advanced FiOS TV system, any grant of a franchise pursuant to this solicitation will not preclude the grant of additional franchises to other companies to offer service simultaneously or in the future,” the city statement continued.

Cablevision, Time Warner and cable companies that don’t operate in New York City—such as Comcast—could apply for citywide operating agreements, too.

Verizon—which the city acknowledged has been negotiating possible citywide franchise terms with city officials for months—said Monday it submitted a proposal in response to the April 11 solicitation, and that it hopes to begin operating as a licensed FiOS TV provider before the end of the year.

Before that can happen, public hearings must be held; the city would have to endorse the franchise and the state Public Service Commission would have to give its consent, Verizon said.

Verizon said it began building a fiber network within city limits in 2004 and uses it to provide FiOS Internet service in some neighborhoods. Last month, it made headlines with an agreement to provide FiOS Internet service topping out at 50 megabits per second to the large Manhattan apartment complexes Stuyvesant Town and Peter Cooper Village.

Verizon said it hopes to complete the buildout in mid-2014.

Key points of Verizon’s application include:

-- Making available FiOS TV service to requesting customers in all five boroughs within a six-year time frame as Verizon's wire centers are upgraded to being video-capable.

-- Providing a fiber-optic institutional network (known as an INET), primarily to support the City's public safety needs.

-- Agreeing to pay franchise fees equivalent to 5% of gross revenue on cable TV service, similar to Time Warner and Cablevision.

-- Agreeing to “appropriate customer service provisions.”

Verizon has been gobbling up cable-TV franchises in New York City suburbs elsewhere in the state and in New Jersey, where it competes with Time Warner, Cablevision, Comcast and other cable incumbents, as it does in other areas of the country.

Harriet Novet, regional vice president for Time Warner Cable’s New York City region, said in a statement that “Time Warner Cable is proud of the service we provide to residents of New York City, where competitive options have always been available. As we are in the process of working out a schedule to renew our franchise agreement, we look forward to continuing to bring New Yorkers an innovative array of new technology, 24-hour-a-day local news and exciting video choices, including scores of high definition channels.”

“The RFPs issued by the City are for new video applicants and separate from our renewal discussions,” the statement continued. “Our contract expires in September and we expect to begin discussions to renew our current service areas with the City shortly.”

Cablevision vice president of media relations Jim Maiella said the company also intends to pursue a new franchise agreement.

“Cablevision has a 20-year record of delivering the best cable television service to our customers in The Bronx and Brooklyn, over a state-of-the-art fiber optic network and with a strong and enduring commitment to the communities we serve,” Maiella said. “We look forward to working with the city on a new franchise agreement, and continuing to provide our award-winning services to New York City customers for years to come.

“The phone company has been privately negotiating with the city for more than a year and has yet to make the details of its franchise proposal public, so at this point it would be inappropriate to comment further,” he added.

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